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Dishonesty: Oh my, we’re finally moving away from the ‘Ghosh Test’

The Supreme Court ruling in Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 will have a huge impact upon the test for ‘dishonesty’ in criminal and professional disciplinary proceedings.

Since 1982, dishonesty has been considered on the basis of the two stage, objective and subjective test arising out of R v Ghosh [1982] EWCA, - the “Ghosh Test”.

The Ghosh Test requires the Court to consider:

firstly, whether the conduct in question was dishonest by the standards of ordinary reasonable and honest people; and

secondly, whether the individual realised that ordinary honest people would regard their behaviour as dishonest.

The second subjective element of the Ghosh Test means that the less the individual’s own standards conform to society’s expectations, the less likely they are to be held accountable for their behaviour in criminal or professional disciplinary proceedings.

For some time the test in civil proceedings has also been the subject of debate. Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 164 and Lord Hoffman in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37 advocated an exclusively objective test. They both felt that, once an individual’s knowledge of the facts was ascertained, it was only necessary to consider whether the conduct was dishonest by the standards of ordinary decent people.

This did not sit easily with a House of Lords decision (Twinsectra v Yardley [2002]) that the Ghosh Test should apply equally in civil proceedings.

In the recent Ivey case, Mr Ivey was a professional gambler who used a card technique, ‘edge-sorting’, which increases the chances of a player winning. When the casino realised the technique had been used, it refused to pay and Mr Ivey brought a £7.7 million claim for his alleged winnings.

Mr Ivey did not believe he had cheated and had merely sought a more advantageous position. Had the Ghosh Test been applied, Mr Ivey would have escaped a finding of dishonesty. However, the High Court, Court of Appeal and Supreme Court all found that when measured against the standards of ordinary decent people his behaviour constituted cheating and, consequently, the casino was not required to pay him.

The Supreme Court went on to confirm that a solely objective test for dishonesty should be applied in all cases. In professional disciplinary proceedings, for example hearings in the Solicitors Disciplinary Tribunal, respondents will now no longer be able to rely on their own ‘lower’ standards or a belief – even if genuinely held – that they have been honest, as long as ordinary decent people would consider their behaviour dishonest. I seriously doubt anyone will see this as a change for the worse.

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